Cinema City Acquires Leading Multiplex Group

February 03, 2011

Pan-regional exhibition circuit Cinema City International (CCI) has acquired the assets of leading multiplex group Palace Cinemas in Central Europe comprising total of 144 screens in Hungary, Czech Republic and Slovakia, for Euro 28 ($37m). Deal will bring CCI's total screen estate to 866 in 90 venues. Under terms of the deal, CCI purchased 100 per cent equity in four separate Palace Cinema group companies operating in Czech Republic (65 screens), Hungary (47 screens) where it already has screens, as well as new territory Slovakia (29 screens). Cinemas not included in the deal were sites under the Palace Mozi brand, namely eight multiplexes in and around Budapest, Hungary. CCI will however provide management at some of these venues. In Czech Republic, the acquisition also includes the eight-screen multiplex scheduled to open next year in Ostrava. Palace cinemas was founded in 1999 and backed by Argus Capital Partners.

AnalysisFollowing the Palace acquisition, which has boosted its total screen footprint by just under 20 per cent, CCI has further consolidated its position as the leading multiplex group in six territories in C and E Europe. It is also a leading circuit in Israel. CCI's largest individual market in Europe by screens is Poland, although it has larger penetration in both Romania and Hungary. CCI now accounts for a 26 per cent market share (by total screens) across its combined territory reach in C and E Europe.

Group has earmarked aggressive expansion through further acquisitions as well as organic growth. It plans to open 35 new cinemas with 360 screens over next few years, of which 60 are currently on track to open this year (2011). Hotspots for new screen growth are currently Romania, Bulgaria and Poland, of which majority of planned construction is focused on Romania. It has also made provision in 2011 to upgrade its screen infrastructure to digital, which it estimates at a total cost of Euro 30m. Consolidated group has already upgraded one third of screens to digital, a significant number in Palace Cinema locations, but also including 120 deployments at its own brand Cinema City screens in Poland.

In 2010, CCI recorded 30.5m cinema admissions across the six territories it operates in, which marked an 11 per cent annual uplift. Planned new openings will boost its screen count by a further 40 per cent to over 1,200. Leading pan-regional exhibition group in total Europe is Odeon UCI with excess of 1,800 screens, followed by Pathe Gaumont with just under 1,000. Cinema City is therefore now third-ranked in Europe by total screen footprint.